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Q1 Earnings Outperformers: LGI Homes (NASDAQ:LGIH) And The Rest Of The Home Builders Stocks


Radek Strnad /
2024/07/04 8:46 am EDT

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how LGI Homes (NASDAQ:LGIH) and the rest of the home builders stocks fared in Q1.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 3.8%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and home builders stocks have had a rough stretch, with share prices down 7.1% on average since the previous earnings results.

LGI Homes (NASDAQ:LGIH)

Based in Texas, LGI Homes (NASDAQ:LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.

LGI Homes reported revenues of $390.9 million, down 19.8% year on year, falling short of analysts' expectations by 4%. It was a slower quarter for the company, with a miss of analysts' earnings estimates.

“Although closings were down during the first quarter, the positive lead and sales trends we experienced, along with our success at expanding community count and maintaining margins, give us confidence that demand remains healthy, supported by positive, long-term fundamentals including strong demographic trends and a limited supply of affordable homes,” said Eric Lipar, Chairman and Chief Executive Officer of LGI Homes.

LGI Homes Total Revenue

LGI Homes delivered the slowest revenue growth of the whole group. The stock is down 7.7% since the results and currently trades at $88.61.

Read our full report on LGI Homes here, it's free.

Best Q1: Tri Pointe Homes (NYSE:TPH)

Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.

Tri Pointe Homes reported revenues of $939.4 million, up 20.5% year on year, outperforming analysts' expectations by 8.8%. It was a stunning quarter for the company, with an impressive beat of analysts' earnings estimates and a solid beat of analysts' backlog sales estimates.

Tri Pointe Homes Total Revenue

Tri Pointe Homes achieved the fastest revenue growth among its peers. The stock is up 0.9% since the results and currently trades at $36.48.

Is now the time to buy Tri Pointe Homes? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Skyline Champion (NYSE:SKY)

Founded in 1951, Skyline Champion (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.

Skyline Champion reported revenues of $536.4 million, up 9.1% year on year, falling short of analysts' expectations by 4.4%. It was a weak quarter for the company, with a miss of analysts' earnings estimates and a miss of analysts' volume estimates.

Skyline Champion had the weakest performance against analyst estimates in the group. The stock is down 13.9% since the results and currently trades at $66.91.

Read our full analysis of Skyline Champion's results here.

Toll Brothers (NYSE:TOL)

Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE:TOL) is a luxury homebuilder across the United States.

Toll Brothers reported revenues of $2.84 billion, up 13.2% year on year, surpassing analysts' expectations by 6.7%. It was an exceptional quarter for the company, with revenue and EPS exceeding expectations.

The stock is down 14% since the results and currently trades at $111.99.

Read our full, actionable report on Toll Brothers here, it's free.

Lennar (NYSE:LEN)

One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Lennar reported revenues of $8.77 billion, up 9% year on year, surpassing analysts' expectations by 2.5%. It was an ok quarter for the company, with a decent beat of analysts' earnings estimates but a miss of analysts' backlog sales estimates.

The stock is down 8.5% since the results and currently trades at $143.28.

Read our full, actionable report on Lennar here, it's free.

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